China’s struggling, large state-owned coal companies have been cutting jobs, and it’s taking a heavy toll on China’s northeast region, according to the New York Times:

The mine’s owner, the Longmay Group, the biggest coal company in northeastern China, announced in September that it planned to lay off 100,000 workers. The elimination of about 40 percent of the work force at 42 mines in four cities is the biggest reduction in jobs that anyone could recall in this steadily declining rust belt near the Russian border.

China has managed mass layoffs at creaky, state-owned businesses like Longmay before, averting the threat of strikes and unrest by suppressing protests and offering payouts and job training.

But that was when the economy was booming and could readily absorb displaced workers. The test the government now faces in this depressed coal town and in other hard-hit areas across the country is whether it can head off labor discontent in a slowing economy.

This is China’s rust belt, heavily dependent on old fashioned state-owned mining and metal bashing companies. It is heavily subsidized by more dynamic parts of China, and it’s a base of conservative views on economic reform. It’s also the region that’s been in the news this week, as Beijing has accused regional officials of falsifying the growth figures.

China, that is, isn’t just facing problems in a few coal towns. A whole region of the country needs to be reconstructed or even re-invented.